Mar 20

Today’s News 20th March 2019

  • Trump's Beijing Blockade Backfires: Not A Single European Country Has Banned Huawei

    For the past year, as part of Trump’s escalating trade war against China, the Trump administration has been waging a parallel campaign to convince America’s European “allies” (at least until the White House unleashes auto tariffs against Brussles in retaliation for China annexing Italy to the Belt and Road initiative) to bar China’s Huawei Technologies from their telecom networks, a process which so far has culminated with the arrest of the Chinese telecom giant’s CFO in Canada. Bolstered by the success of similar efforts in Australia and New Zealand, the White House sent envoys to European capitals with warnings that Huawei’s gear would open a backdoor for Chinese spies. Last week, the U.S. even threatened to cut off intelligence sharing if Germany ignored its advice.

    So far, the gamble to pressure Europe has backfired: not a single European country has banned Huawei.

    Confirming that Europe and the US are now allies only on paper, was the scathing commentary by Angela Merkel at a Berlin conference on Tuesday: “There are two things I don’t believe in,” Merkel said: “First, to discuss these very sensitive security questions publicly, and second, to exclude a company simply because it’s from a certain country.”

    And just like that, Europe took its place in the grand superpower race: right next to China (and Russia) against the US.

    As Bloomberg notes, Europe, and especially Germany, both of which are extremely reliant on continued open trade with, Beijing has been caught in the middle of the U.S.-China trade war. Trying to remain impartial, Europe has been seeking to balance concerns about growing Chinese influence with a desire to increase business with Trump’s trade nemesis. And in a grand quid pro quo, with no ban in the works so far, Huawei is a budget frontrunner for contracts to build Europe’s 5G phone networks, the ultra-fast wireless technology the continent’s leaders hope will fuel the growth of a data-based economy, while building goodwill and hopefully receiving a few billion in Chinese investments in the process.

    The first salvo against Trump’s diplomatic effort took place last month when the U.K.’s spy agency indicated that a ban on Huawei is unlikely, citing a lack of viable alternatives to upgrade British telecom networks. Next, Italy’s government also dismissed U.S. warnings as it seeks to boost trade with China. In Germany, authorities have proposed tighter security rules for data networks rather than outlawing Huawei. France is doing the same after initially flirting with the idea of restrictions on Huawei.

    “The 5G rollout is one of the most complex and expensive technology projects ever undertaken,” said Paul Triolo, an analyst at Eurasia Group, a political risk consultancy. “The challenge for Europe is to find a way that minimizes the security risks linked to Chinese suppliers but not delay 5G, which is so important to the region.”

    Governments have also listened to domestic phone companies such as Vodafone, Deutsche Telekom, and Orange, all of whom have warned that sidelining Huawei would delay the implementation of 5G by years and add billions of euros in cost.

    “We’ve not seen any evidence of backdoors into the network,” said Helen Lamprell, Vodafone’s top lawyer and chief lobbyist in the U.K. “If the Americans have evidence, please put it out on the table.”

    Predictably, the US did not take the rebuke sitting down.

    In February, the White House dispatched representatives to MWC Barcelona, the industry’s top annual trade show, who urged executives and politicians to avoid Huawei and its Chinese peers. At the same time, the U.S. ambassador in Berlin wrote a letter to the German government saying it should drop Huawei or risk throttling U.S. intelligence sharing (Germany’s response was not  exactly calm, cool and collected).

    Then there is the matter of value, and here China beats everyone hands down.

    As Bloomberg notes, while “carriers can also buy equipment from the likes of Ericsson AB, Nokia Oyj, and Samsung Electronics Co., industry consultants say Huawei’s quality is high, and the company last year filed 5,405 global patents, more than double the filings by Ericsson and Nokia combined.”

    The biggest irony: while the US accuses China of back door spying, the world already knows that the US is guilty of just that, thanks to Edward Snowden’s revelation. As a result, European lawmakers have been wary of Cisco, Huawei’s American rival, ever since it was revealed that the National Security Agency’s used U.S.-made telecom equipment for spying on, well, everyone. This is one of the reasons why between 2013 and 2018, Huawei increased its telecom market share by 8 percentage points:

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    Still, neither China, nor Huawei are safe yet. Since China has indeed been walking in the US’ footsteps and has been using its own backdoors to spy on both foes and friends, German hard-liners in the intelligence community realize that the push-pull against Huawei is only there to score political points again Washington. They also admit the company isn’t trustworthy, and updated security rules the government is drafting will make it harder for Huawei to win contracts. Denmark’s biggest phone company, TDC A/S, declined to renew a contract with Huawei and instead picked Ericsson as strategic partner to develop its 5G network. Even as Europe refuses to block Huawei, the Chinese telecom giant has been under increasing pressure to allow greater scrutiny of its technology and increase assurances its equipment can’t be accessed by Chinese spies.

    In response, Huawei told Bloomberg it has “placed cyber security and user privacy protection at the very top of its priorities” adding that safeguarding networks is the joint responsibility of vendors, telecom companies, and regulators.

    But most importantly, despite US insistence, so far there’s little evidence to suggest Europe will shun Huawei. In fact, as Bloomberg adds, the national railway companies in Germany and Austria have bought the company’s equipment, and carriers such as Deutsche Telekom and Telefonica are running 5G test projects with its products.

    As a result of Europe’s rebellion against the US, Huawei’s global revenue growth accelerated in the first two months of the year, climbing by more than a third, founder Ren Zhengfei said last week. And the company says sales of its smartphones doubled in Germany during the same period.

    “We don’t know what the U.S.’s next move is, so it’s not over yet,” said Bengt Nordstrom, CEO of telecom consultancy Northstream. “But whatever market share Huawei may lose in Europe, they’ll win back in China.”

    Meanwhile, the question of how Trump takes defeat in diplomatic pressure with Europe remains open, not to mention how this would translate from mere diplomacy to global economics and capital markets: one thing is certain, should Europe’s rebuke of Washington be overly publicized, tariffs on Europe’s exports – such as automobiles – to the US would appear inevitable, as would the next global recession as globalization takes it next big step backward.

  • Turkey: Putin's Ally In NATO?

    Authored by Burak Bekdil via The Gatestone Institute,

    • On March 7, Turkish President Recep Tayyip Erdoğan said Turkey would never turn back from the S-400 missile deal with Russia. He even added that Ankara may subsequently look into buying the more advanced S-500 systems now under construction in Russia.

    • With the S-400 deal, Turkey is simply telling its theoretical Western allies that it views “them,” and “not Russia,” as a security threat. Given that Russia is widely considered a security threat to NATO, Turkey’s odd-one-out position inevitably calls for questioning its official NATO identity.

    • Turkey has NATO’s second biggest army, and its military love affair with Russia may be in its infancy now, but it undermines NATO’s military deterrence against Russia.

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    Turkey has NATO’s second biggest army, and its military love affair with Russia may be in its infancy now, but it undermines NATO’s military deterrence against Russia. Pictured: Turkish President Recep Tayyip Erdoğan meets with Russian President Vladimir Putin in Moscow, on March 10, 2017. (Image source: kremlin.ru)

    On September 17, 1950, more than 68 years ago, the first Turkish brigade left the port of Mersin on the Mediterranean coast, arriving, 26 days later, at Busan in Korea. Turkey was the first country, after the United States, to answer the United Nations’ call for military aid to South Korea after the North attacked that year. Turkey sent four brigades (a total of 21,212 soldiers) to a country that is 7,785 km away. By the end of the Korean War, Turkey had lost 741 soldiers killed in action. The U.N. Memorial Cemetery in Busan embraces 462 Turkish soldiers.

    All that Turkish effort was aimed at membership in NATO, a seat that Turkey eventually won in February 18, 1952. During the Cold War, Turkey remained a staunch U.S. and NATO ally, defending the alliance’s southeastern flank. Nevertheless, events have changed dramatically since the Islamist government of Prime Minister (now President) Recep Tayyip Erdoğan first came to power in November 2002. The “Turkish retreat” did not happen overnight.

    In April 2009, military teams from Turkey and its neighbor, President Bashar al-Assad’s Syria, crossed the border and visited outposts during joint military drills. That was the first time a NATO army had exercised with Syria’s military.

    In September 2010, Turkish and Chinese air force jets conducted joint exercises in Turkish airspace. That, too, was the first time a NATO air force had military exercises with China’s.

    In 2011, a Transatlantic Trends survey revealed that Turkey was the NATO member with the lowest support for the alliance: just 37% (down from 53% in 2004).

    In 2012, Turkey joined the Shanghai Cooperation Organization (SCO, whose members are Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan) as a dialogue partner.

    In 2017, a senior Chinese diplomat said that Beijing was ready to discuss Turkey’s membership in the SCO.

    In September 2013, Turkey announced that it had selected a Chinese company (CPMIEC) for the construction of its first long-range air and anti-missile defense system under the then $3.5 billion T-LORAMIDS program. That contract was later scrapped, but Erdoğan then turned to Russian President Vladimir Putin for a replacement: the S-400 long-range air and anti-missile defense system.

    Despite increasing U.S., Western and NATO pressure, Erdoğan since that time has refused to give up the Russian air defense architecture and instead has boldly defended “Turkey’s sovereign decision.” Most recently, on March 7, Erdoğan saidTurkey would never turn back from the S-400 missile deal. He even added that Ankara may subsequently look into buying the more advanced S-500 systems now under construction in Russia.

    Washington is still warning its part-time NATO ally that the Russian deal would have its “grave consequences.” According to CNN:

    “If Turkey takes the S-400s there will be grave consequences,” acting chief Pentagon spokesperson Charles Summers told reporters Friday [March 8], saying it would undermine America’s military relationship with Ankara.

    Summers said those consequences would include the US not allowing Turkey to acquire the F-35 jet and the Patriot missile defense system.

    Turkey, a member of the U.S.-led, multinational consortium that builds the new generation fighter, the F-35 Lightening II, had committed to buy more than 100 of the aircraft.

    Turkey’s choice in favor of Russia (and against NATO) will surely have repercussions on several wavelengths. The U.S. may or may not fully retaliate by expelling Turkey from the Joint Strike Fighter group that builds the F-35. That will be a decision carrying with it economic considerations in addition to military and political ones. Turkey, if expelled, may turn further to Russia for a next-generation fighter solution, which Putin would only be too happy to offer — and create further cracks within the NATO bloc, a move Erdoğan probably believes the U.S. administration (and NATO) cannot afford to risk. Erdoğan’s gambit, however, has a more important message to NATO than just procuring military gear: Turkey’s geo-strategic identity.

    The S-400 is an advanced air defense architecture, especially if it is utilized against Western (NATO) aerial assets and firepower. It is an elementary military software fact that Turkey cannot use this system against Russian aggression or Russian-made weapons. With the S-400 deal, Turkey is simply telling its theoretical Western allies that it views “them,” and “not Russia,” as a security threat. Given that Russia is widely considered a security threat to NATO, Turkey’s odd-one-out position inevitably calls for questioning its official NATO identity.

    Turkey has NATO’s second biggest army, and its military love affair with Russia may be in its infancy now, but it undermines NATO’s military deterrence against Russia. Russia, however, would doubtless like nothing better than to see the break-up of a military alliance which ensures that an “armed attack against one” NATO member “shall be considered an attack against them all”.

  • Empire Of Absurdity: Recycled Neocons, Recycled Enemies

    Authored by Major Danny Sjursen (ret.) via AntiWar.com,

    There are times when I wish that the United States would just drop the charade and declare itself a global empire.

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    As a veteran of two imperial wars, a witness to the dark underside of America’s empire-denial, I’ve grown tired of the equivocation and denials from senior policymakers. The U.S. can’t be an empire, we’re told, because – unlike the Brits and Romans – America doesn’t annex territories outright, and our school children don’t color its colonies in red-white-and-blue on cute educational maps.

    But this distinction, at root, is rather superficial. Conquest, colonization, and annexation are so 19th century – Washington has moved beyond the overt and engages in the (not-so) subtle modern form of imperialism. America’s empire over the last two decades – under Democrats and Republicans – has used a range of tools: economic, military, political, to topple regimes, instigate coups, and starve “enemy” civilians. Heck, it didn’t even start with 9/11 – bullying foreigners and overturning uncooperative regimes is as American as apple pie.

    Still, observing post-9/11, post-Iraq/Afghanistan defeat, Washington play imperialism these days is tragicomically absurd. The emperor has no clothes, folks. Sure, America (for a few more fleeting years) boasts the world’s dominant economy, sure its dotted the globe with a few hundred military bases, and sure it’s military still outspends the next seven competitors combined. Nonetheless, what’s remarkable, what constitutes the real story of 2019, is this: the US empire can’t seem to accomplish anything anymore, can’t seem to bend anybody to its will. It’s almost sad to watch. America, the big-hulking has-been on the block, still struts its stuff, but most of the world simply ignores it.

    Make no mistake, Washington isn’t done trying; it’s happy to keep throwing good money (and blood) at bad: to the tune of a cool $6 trillion, 7,000 troop deaths, and 500,000 foreign deaths – including maybe 240,000 civilians. But what’s it all been for? The world is no safer, global terror attacks have only increased, and Uncle Sam just can’t seem to achieve any of its preferred policy goals.

    Think on it for a second: Russia and Iran “won” in Syria; the Taliban and Pakistan are about ready to “win” in Afghanistan; Iran is more influential than ever in Iraq; the Houthis won’t quit in Yemen; Moscow is keeping Crimea; Libya remains unstable; North Korea ain’t giving up its nukes; and China’s power continues to grow in its version of the Caribbean – the South China Sea. No amount of American cash, no volume of our soldiers’ blood, no escalation in drone strikes or the conventional bombing of brown folks, has favorably changed the calculus in any of these regional conflicts.

    What does this tell us? Quite a lot, I’d argue – but not what the neoliberal/neoconservative alliance of pundits and policymakers are selling. See for these unrepentant militarists the problem is always the same: Washington didn’t use enough force, didn’t spend enough blood and treasure. So is the solution: more defense spending, more CIA operations, more saber-rattling, and more global military interventions.

    No, the inconvenient truth is as simple as it is disturbing to red-blooded patriots. To wit, the United States – or any wannabe hegemon – simply doesn’t possess the capability to shape the world in its own image. See those pesky locals – Arabs, Asians, Muslims, Slavs – don’t know what’s good for them, don’t understand that (obviously) there is a secret American zipped inside each of their very bodies, ready to burst out if given a little push!

    It turns out that low-tech, cheap insurgent tactics, when combined with impassioned nationalism, can bog down the “world’s best military” indefinitely. It seems, too, that other regional heavyweights – Russia, China, Iran, North Korea – stand ready to call America’s nuclear bluff. That they know the US all-volunteer military and consumerist economy can’t ultimately absorb the potential losses a conventional war would demand. Even scarier for the military-industrial-congressional-media establishment is the logical extension of all this accumulated failure: the questionable efficacy of military force in the 21st century.

    Rather than recognize the limits of American military, economic, and political power, Bush II, Obama, and now Trump, have simply dusted off the old playbook. It’s reached the level of absurdity under the unhinged regime of Mr. Trump. Proverbially blasting Springsteen’s “Glory Days,” as its foreign policy soundtrack, the Donald and company have doubled down. Heck, if Washington can’t get its way in Africa, Europe, Asia, or the Mideast, well why not clamp down in our own hemisphere, our traditional sphere of influence – South and Central America.

    Enter the lunacy of the current Venezuela controversy. Trump’s team saw a golden opportunity in this socialist, backwater petrostate. Surely here, in nearby Monroe Doctrine country, Uncle Sam could get his way, topple the Maduro regime, and coronate the insurgent (though questionably legitimate) Juan Guaido. It’s early 20th century Yankee imperialism reborn. Everything seemed perfect. Trump could recall the specter of America’s tried and true enemy – “evil” socialism – cynically (and absurdly) equating Venezuelan populism with some absurd Cold-War-era existential threat to the nation. The idea that Venezuela presents a challenge on the scale of Soviet Russia is actually farcical. What’s more, and this is my favorite bit of irrationality, we were all recently treated to a game of “I know you are but what am I?” from Secretary of State Mike Pompeo, who (with a straight face) claimed Cuba, tiny island Cuba, was the real “imperialist” in Venezuela.

    Next, in a move reminiscent of some sort of macabre 1980’s theme party, Trump resuscitated Elliot Abrams – you know, the convicted felon of Iran-Contra infamy, to serve as Washington’s special envoy to embattled Venezuela. Who better to act as “fair arbiter” in that country than a war-criminal with the blood of a few hundred thousand Central Americans (remember the Contras?!?) on his hands back in the the good old (Reagan) days.

    Despite all this: America’s military threats, bellicose speechifying, brutal sanctions, and Cold War-style conflict-framing, the incumbent Maduro seems firmly in control. This isn’t to say that Venezuelans don’t have genuine grievances with the Maduro government (they do), but for now at least, it appears the military is staying loyal to the president, Russia/China are filling in the humanitarian aid gaps, and Uncle Sam is about to chalk up another loss on the world scene. Ultimately, whatever the outcome, the crisis will only end with a Venezuelan solution.

    America’s impotence would almost be sad to watch, if, and only if, it wasn’t all so tragic for the Venezuelan people.

    So Trump and his recycled neocons will continue to rant and rave and threaten Venezuela, Haiti, Cuba, and so on and so forth. America will still flex its aging, sagging muscles – a reflexive habit at this point.

    Only now it’ll seem sad. Because no one is paying attention anymore.

    The opposite of love is isn’t hate – it’s indifference.

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    Danny Sjursen is a retired US Army officer and regular contributor to Antiwar.comHe served combat tours with reconnaissance units in Iraq and Afghanistan and later taught history at his alma mater, West Point. He is the author of a memoir and critical analysis of the Iraq War, Ghostriders of Baghdad: Soldiers, Civilians, and the Myth of the Surge. Follow him on Twitter at @SkepticalVet.

  • Visualizing How Americans Make And Spend Their Money

    How do you spend your hard-earned money?

    Whether you are extremely frugal, or you’re known to indulge in the finer things in life, how you allocate your spending is partially a function of how much cash you have coming in the door.

    Simply put, as Visual Capitalist’s Jeff Desjardins writes, the more income a household generates, the higher the portion that can be spent on items other than the usual necessities (housing, food, clothing, etc), and the more that can be saved or invested for the future.

    Earning and Spending, by Income Group

    Today’s visuals come to us from Engaging Data, and they use Sankey diagrams to display data from the Bureau of Labor Statistics (BLS) that helps to paint a picture of how different household income groups make and spend their money.

    We’ll show you three charts below for the following income groups:

    1. The Average American

    2. The Lowest Income Quintile (Bottom 20%)

    3. The Highest Income Quintile (Highest 20%)

    Let’s start by taking a look at the flows of the average American household:

    The Average American Household – $53,708 in spending (73% of total income)

    The average U.S. household has 2.5 people (1.3 income earners, 0.6 children, and 0.4 seniors)

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    As you can see above the average household generates $73,574 of total inflows, with 84.4% of that coming from salary, and smaller portions coming from social security (11.3%), dividends and property (2.6%), and other income (1.7%).

    In terms of money going out, the highest allocation goes to housing (22.1% of spending), while gas and insurance (9.0%), household (7.7%), and vehicles (7.5%) make up the next largest categories.

    Interestingly, the average U.S. household also says it is saving just short of $10,000 per year.

    The Bottom 20% – $25,525 in spending (100% of total income)

    These contain an average of 1.6 people (0.5 income earners, 0.3 children, and 0.4 seniors)

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    How do the inflows and outflows of the average American household compare to the lowest income quintile?

    Here, the top-level statistic tells much of the story, as the poorest income group in America must spend 100% of money coming in to make ends meet. Further, cash comes in from many different sources, showing that there are fewer dependable sources of income for families to rely on.

    For expenditures, this group spends the most on housing (24.8% of spending), while other top costs of living include food at home (10.1%), gas and insurance (7.9%), health insurance (6.9%), and household costs (6.9%).

    The Highest 20% – $99,639 in spending (53% of total income)

    These contain an average of 3.1 people (2.1 income earners, 0.8 children, and 0.2 seniors)

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    The wealthiest household segment brings in $188,102 in total income on average, with salaries (92.1%) being the top source of inflows.

    This group spends just over half of its income, with top expenses being housing (21.6%), vehicles (8.3%), household costs (8.2%), gas and insurance (8.2%), and entertainment (6.9%).

    The highest quintile pays just short of $40,000 in federal, state, and local taxes per year, and is also able to contribute roughly $50,000 to savings each year.

    Spending Over Time

    For a fascinating look at how household spending has changed over time, don’t forget to check out our previous post that charts 75 years of data on how Americans spend money.

  • After Blocking Zero Hedge And Others, NZ Telcos Demand Big-Tech Censorship Surge To "Protect Consumers"

    In the wake of last week’s terror attacks at two New Zealand mosques which left 50 dead, several websites which either reported on the incident, hosted footage of the attacks, or have simply allowed people to engage in uncensored discussion such as Dissenter or Zero Hedge, have been partially or completely blocked in both New Zealand and Australia for the sake of “protecting consumers,” according to the CEOs of three New Zealand telcos.  

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    In the immediate aftermath of the shooting – which was broadcast over Facebook Live by accused gunman Brenton Tarrant to an initial audience of just 200 viewers (none of whom reported it) and had 4,000 overall views before it was taken down – Facebook deleted 1.5 million videos of the attack, of which 1.2 million were blocked at the time of upload. 

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    A video of the attacks is still freely available to anyone who wishes to download it from bittorrent.

    Twitter has also been aggressively censoring content related to the Christchurch shooting – perhaps most egregiously forcing journalist Nick Monroe to delete a large number of tweets as he covered the incident in real time, just one of which had links to footage of the shooting. Document hosting website Scribd, meanwhile, has been deleting copies of Tarrant’s 74-page manifesto. 

    In addition to documenting the incident, Monroe has been noting the mass censorship surrounding the shootings – as well as things such as the New Zealand herald stealth editing a March 15 article to remove mention of a “well known Muslim local” who “chased the shooters and fired two shots at them as they sped off.” 

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    That said, Twitter and Facebook’s suppression hasn’t gone far enough according to New Zealand telecom CEOs, who have penned an open letter to Facebook, Twitter and Google suggesting that they follow European proposals for hyper-vigilant policing of content for the sake of ‘protecting consumers.’ 

    “Consumers have the right to be protected, whether using services funded by money or data. Now is the time for this conversation to be had and we call on all of you to join us at the table and be part of the solution,” reads the letter. 

    Zero Hedge banned… again. 

    Less than a week after Facebook ‘mistakenly’ banned us for two days with no explanation following several reports which were critical of the social media giant, we learned that Zero Hedge has now been banned in New Zealand and Australia, despite the fact that we never hosted video footage of the Christchurch attack. We were not contacted prior to the censorship. Instead, we have received a steady flood of people noting that the site is unavailable in the two countries unless a VPN is used. 

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    And while Australia and New Zealand account for a negligible amount of traffic to Zero Hedge, the stunning arrogance of NZ and OZ telcos to arbitrarily impose nanny-state restrictions on content is more than a little disturbing, and should – at least in a so-called democracy – be subject to majority vote.

    Also banned down under are the ‘chans‘ and video hosting platform LiveLeak, among others. 

    The letter continues

    “You may be aware that on the afternoon of Friday 15 March, three of New Zealand’s largest broadband providers, Vodafone NZ, Spark and 2degrees, took the unprecedented step to jointly identify and suspend access to web sites that were hosting video footage taken by the gunman related to the horrific terrorism incident in Christchurch,” reads the joint letter from Vodafone’s Jason Paris, and NZ telcos Spark and 2degrees Simon Moutter Stewart Sherriff. 

    “As key industry players, we believed this extraordinary step was the right thing to do in such extreme and tragic circumstances. Other New Zealand broadband providers have also taken steps to restrict availability of this content, although they may be taking a different approach technically,” the letter continues. 

    “We also accept it is impossible as internet service providers to prevent completely access to this material. But hopefully we have made it more difficult for this content to be viewed and shared – reducing the risk our customers may inadvertently be exposed to it and limiting the publicity the gunman was clearly seeking”

    “Internet service providers are the ambulance at the bottom of the cliff, with blunt tools involving the blocking of sites after the fact. The greatest challenge is how to prevent this sort of material being uploaded and shared on social media platforms and forums.

    “We call on Facebook, Twitter and Google, whose platforms carry so much content, to be a part of an urgent discussion at an industry and New Zealand Government level on an enduring solution to this issue.“

    So while the telcos have defended their decision to censor a wide swath of material in order to shield people from dangerous information – and have encouraged social media platforms to commit to European-style information control, Kiwis and Australians will only get to know what the technocracy approves in order to ‘protect consumers.’ 

    Unless they set aside 15 seconds and use a VPN.

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  • "The Era Of Negative Population Growth Is Coming Soon"

    Submitted by Nicholas Colas of DataTrek Research

    Guess which country’s preeminent social sciences think tank wrote in a recent report: “The era of negative population growth is coming soon”. That “soon” is a tell, because this is not from researchers in Japan, Italy, Portugal or Greece. All those countries already show negative population growth.

    The country in question is China. Using expected future fertility rates from the United Nations (which must comport with their own analysis, or they would have used their own numbers), the Chinese Academy of Social Sciences reported that:

    • The Chinese population will peak at 1.442 billion people a decade from now in 2029.

    • From 2030 on, the population base will shrink by 0.3% annually until 2050, at which point it will be 1.364 billion.

    • The trend to a smaller Chinese population will extend to at least 2065, at which point the country will be back to levels last seen in 1996 (1.248 billion).

    • All this assumes fertility rates increase from the current 1.6 children per woman to 1.77 by the end of the forecast horizon. The researchers note that if fertility rates remain constant, China’s population will decrease to 1.172 billion people by 2065, the same as it was in 1990.

    • Link to the report at the end of this section. Google Translate works well here.

    All this stands in stark contrast to United Nations projections for many regions of the world (2000 – 2050):

    • Asia as a whole: +0.7% per annum

    • Africa: +2.3%

    • South/Central America/Caribbean: +0.8%

    • North America: +0.7%

    • Oceana: +1.2%

    • Only Europe is expected to show population declines on a regional basis, at -0.3%.

    China’s “one child” policy, which ran from 1979 – 2015, is one cause of the country’s current demographic challenge. After it was changed to a “two child policy” in 2016, fertility rates did pick up for a year but declined again in 2017 and 2018. Demographers use 2.1 children/woman as a “replacement rate” for the existing population. In 2018, China’s fertility rate was 1.6 children/woman, below the Chinese Academy’s worst-case long-term scenario mentioned above.

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    Now, you’re no doubt aware of the demographic challenges facing the other countries we mentioned at the top of this section, and how those inform macroeconomic policy and long run growth potential. Japan and much of Europe are already shrinking, a significant issue for policymakers from local officials all the way to the European Central Bank. Add to that an associated increase in median age of the population, and you get a gale of headwinds that are hard to redress.

    What’s also interesting to us about the Chinese data: compare the expected median age of the population there in 2050 (30 years from now) to some of the countries/regions we know already face the issue of a shrinking and aging base of citizens:

    • Japan: 48.6 years median age of the population today

    • Europe: 42.7 median age today

    • China’s current median age: 35.6 years

    • China’s median age in 2030: 41.1 years (close to Europe today)

    • China’s median age in 2050: 45.2 years (close to Japan today)

    • Worth noting: North America’s median age is currently 37.5 years, 5% older than China’s current reading. By 2050 projections have it at 42.1 years, 7% younger than China’s population.

    The upshot to all this in 3 summary points:

    #1: Demography is not destiny, but it is always a factor to consider when assessing a country/region’s long-term growth rates. Recent economic history in Europe and Japan shows that when population growth goes negative and median age rises, a host of economic and political stresses come to the fore.

    #2: A country’s potential GDP growth is a function of population and productivity growth, and nothing else. Chinese policy makers know that the impending decline of the local population must come with significant advances in productivity to assure future growth. While the country has scaled back on its “Made in China 2025” rhetoric, it must continue to invest in disruptive technology to enable future productivity gains. Population growth will soon be an outright negative to the GDP equation.

    #3: Unlike China, Japan and Europe, US population growth should remain positive through 2050 and beyond. The US Census Bureau does have a slow decline in percentage terms in their numbers, from 0.70%/year now to 0.40%/year in the out years. That may not seem like much, but it is a notable difference when other major economic centers around the world will be shrinking. Score one more point for favoring US equities, our current (and long-standing) investment position.

    Sources:

    Chinese Academy of Social Sciences report: http://ex.cssn.cn/zx/bwyc/201901/t20190104_4806519_1.shtml

    A New York Times article published just after the report was issued, with more information: https://www.nytimes.com/interactive/2019/01/17/world/asia/china-population-crisis.html

    Median Age Projections: https://www.eea.europa.eu/data-and-maps/figures/median-age-projections

  • Off-Duty Pilot Saved Doomed Lion Air 737 From Nosedive Day Before Deadly Crash

    An off-duty pilot hitching a ride in the cockpit jumpseat of a doomed 737 Max 8 last October reportedly saved the plane just one day before it crashed off the coast of Indonesia while being operated by a different crew, killing 189 onboard. 

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    Lion Air Boeing 737-8 MAX

    According to Bloomberg, the ‘dead-head’ pilot on the earlier flight from Bali to Jakarta was able to explain to the crew how to disable a malfunctioning flight-control system by cutting power to a motor driving the nose of the plane down. 

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    Rescue team members carry wreckage from Lion Air Flight 610 at the Tanjung Priok port in Jakarta, Indonesia, on Thursday. Beawiharta/Reuters

    The previously undisclosed detail supports the suggestion that a lack of training is may be at least partially to blame in the March 10 crash of another 727 Max 8. 

    The previously undisclosed detail on the earlier Lion Air flight represents a new clue in the mystery of how some 737 Max pilots faced with the malfunction have been able to avert disaster while the others lost control of their planes and crashed. The presence of a third pilot in the cockpit wasn’t contained in Indonesia’s National Transportation Safety Committee’s Nov. 28 report on the crash and hasn’t previously been reported. –Bloomberg

    As we noted last week, several pilots had repeatedly warned federal authorities of the Max 8’s shortcomings, with one pilot describing the plane’s flight manual as “inadequate and almost criminally insufficient.” 

    “The fact that this airplane requires such jury-rigging to fly is a red flag. Now we know the systems employed are error-prone — even if the pilots aren’t sure what those systems are, what redundancies are in place and failure modes. I am left to wonder: what else don’t I know?” wrote the captain. 

    After the Lion Air crash, two U.S. pilots’ unions said the potential risks of the system, known as the Maneuvering Characteristics Augmentation System, or MCAS, hadn’t been sufficiently spelled out in their manuals or training. None of the documentation for the Max aircraft included an explanation, the union leaders said. –Bloomberg

    “We don’t like that we weren’t notified,” said Southwest Airlines Pilots Association president Jon Weaks in November. “It makes us question, ‘Is that everything, guys?’ I would hope there are no more surprises out there.” 

    In the Lion Air crash, a malfunctioning sensor is believed to have tricked the plane’s computers to force the nose of the plane down to avoid a stall. Following the March 10 crash less than six months later – which followed a “very similar” track to the Lion Air flight, All Boeing 737 Max 8s were grounded by US regulators following dozens of countries and airlines doing so first. 

    “After this horrific Lion Air accident, you’d think that everyone flying this airplane would know that’s how you turn this off,” said former FAA accident investigation division director Steve Wallace. 

    Meanwhile, investigators are now looking into how the new 737 model was approved. The Transportation Department’s inspector general has begun an inquiry into the plane’s certification, while a grand jury under the US DOJ is also seeking records in a possible criminal investigation of the plane’s certification. 

    “We will fully cooperate in the review in the Department of Transportation’s audit,” said Boeing spokesman Charles Bickers. 

  • The Reality Of Mind-Reading: Neuroscientists Can Predict Your Choices 11 Seconds Before You Make Them

    Authored by Dagny Taggart via The Organic Prepper blog,

    Does free will truly exist?

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    According to a new study, maybe not. It appears that we may have less control over our personal choices than we think. Unconscious brain activity seems to determine our choices well before we are even aware of them.

    Researchers at the Future Minds Lab at UNSW School of Psychology in Australia were able to predict basic choices participants made BEFORE they consciously declared their decisions. Their findings were published last week in the journal Scientific Reports.

    For the experiment, the researchers asked 14 participants to freely choose between two visual patterns – one of red horizontal stripes and one of green vertical stripes –  before consciously imagining them while being observed in a functional magnetic resonance imaging machine (fMRI).

    They were given a maximum of 20 seconds to choose between the patterns. Once they’d made a decision, they pressed a button and had 10 seconds to visualize the pattern as hard as they could. Next, they were asked “what did you imagine?” and “how vivid was it?” They answered these questions by pressing buttons.

    The results were unsettling.

    Scientists were able to predict which pattern people would choose before their thoughts even became conscious.

    Here is an explanation of the results, from the UNSW press release:

    Not only could the researchers predict which pattern they would choose, they could also predict how strongly the participants were to rate their visualizations. With the assistance of machine learning, the researchers were successful at making above-chance predictions of the participants’ volitional choices at an average of 11 seconds before the thoughts became conscious.

    The brain areas that revealed information about the future choices were located in executive areas of the brain – where our conscious decision-making is made – as well as visual and subcortical structures, suggesting an extended network of areas responsible for the birth of thoughts. (source)

    Professor Joel Pearson said we may have thoughts on ‘standby’ based on previous brain activity, which then influences our final decisions without us being aware:

    “We believe that when we are faced with the choice between two or more options of what to think about, non-conscious traces of the thoughts are there already, a bit like unconscious hallucinations.

    As the decision of what to think about is made, executive areas of the brain choose the thought-trace which is stronger. In, other words, if any pre-existing brain activity matches one of your choices, then your brain will be more likely to pick that option as it gets boosted by the pre-existing brain activity.

    This would explain, for example, why thinking over and over about something leads to ever more thoughts about it, as it occurs in a positive feedback loop.” (source)

    The subjective strength of future thoughts was also dependent on activity housed in the early visual cortex, an area in the brain that receives visual information from the outside world. This suggests that the current state of activity in perceptual areas (which are believed to change randomly) has an influence on how strongly we think about things, the researchers explained.

    This study isn’t the first to show that our thoughts can be predicted before we have them.

    While these findings might seem shocking, this study isn’t the first to show that thoughts can be predicted before they are conscious.

    This study builds on previous research, reports Quartz:

    As the researchers note, similar techniques have been able to predict motor decisions between seven and 10 seconds before they’re conscious,  and abstract decisions up to four seconds before they’re conscious. Taken together, these studies show how understanding how the brain complicates our conception of free will.

    Neuroscientists have long known that the brain prepares to act before you’re consciously aware, and there are just a few milliseconds between when a thought is conscious and when you enact it. Those milliseconds give us a chance to consciously reject unconscious impulses, seeming to form a foundation of free will. (source)

    The researchers say that their findings may have implications for mental disorders involving thought intrusions that use mental imagery, such as PTSD. They cautioned against assuming that all choices are predetermined by pre-existing brain activity.

    “Our results cannot guarantee that all choices are preceded by involuntary images, but it shows that this mechanism exists, and it potentially biases our everyday choices,” Professor Pearson said.

    This kind of research could benefit people with certain disorders – but at what cost?

    This kind of mind-reading technology certainly appears to have the potential for abuse and manipulation if it falls into the hands of the wrong people.

    What does this mean for privacy? What does this mean for those being interrogated by law enforcement?

    The list of ramifications could go on and on.

    This is only part of a growing problem with invasive technology.

    Just last month, a team of neuro-engineers at Columbia University reported that they developed a system that can translate people’s thoughts into intelligible, recognizable speech.

    If you are concerned about how far all of this research is going to go, you aren’t alone. As I asked in Science FACT: Mind-Reading Technology Is Now Reality:

    With this rapid progression of technological advancement, one has to wonder…how close are we to technological singularity?

    Oh, and on that note – Facebook is really into the idea of accessing user information directly from their brains. Yes, you read that correctly: Facebook wants to read users’ minds. During a February interviewwith Harvard law school professor Jonathan Zittrain, CEO Mark Zuckerberg mentioned a brain-computer interface (it would look similar to a shower cap) the social media behemoth is researching.

    In response, Zittrain said, “Fifth Amendment implications are staggering.”

    Zuckerberg’s reply will surprise no one: “Presumably, this would be something that someone would choose to use as a product.”

    Despite years of bad press, public outrage over privacy violations, and the loss of millions of users (and counting), Facebook remains determined to infect our lives whether we want it to or not. And if you believe you are safe from the tech giant’s creepy stalker tactics, think again: Even if you have deactivated all of your social media accounts – or never had any in the first place – your privacy is not guaranteed.

    Technology is progressing so rapidly it is difficult to keep up.

    Nearly every day, reports of new and potentially invasive developments are being announced. Scientists and technology companies claim that this research is for the benefit of society, even while warning us about its potential dangers.

    It sure seems like a dystopian nightmare is approaching.

  • Prosecutors Offer To Drop Robert Kraft Prostitution Charges, But There's A Catch

    Several weeks after America gasped in shocked amazement after prosecutors announced that some of the most wealthy and powerful people had been busted in a sting operation targeting a Jupiter, Florida strip mall spa where they paid about $70 for a rub and tug, and were charged with prostitution, on Tuesday Florida prosecutors offered to drop charges against New England Patriots owner Robert Kraft and a number of other men – including several Wall Street legends – charged with soliciting prostitution… but there is a catch.

    As the WSJ reports, the settlement offered calls for the men to admit they would have been proven guilty at trial, in other words, unlike a typical SEC settlement where a party can get away with neither admitting nor denying guilt, in this case, the “johns” have to admit guilt.

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    While the proposed deferred prosecution agreement calls for completion of an education course about prostitution, completion of 100 hours of community service, screening for sexually transmitted diseases and payment of some court costs, it also includes the unusual provision for the defendants to review the evidence in the case and agree that, if it were to go to trial, the state would be able to prove their guilt, a WSJ source said.

    It isn’t clear whether Kraft and others would accept such a condition, especially since when the charges were announced, a spokesman for Mr. Kraft denied he engaged in illegal activity.

    Perhaps the proposal is not that bizarre: a spokesman for the Florida attorney’s office said that it is the standard resolution for first-time offenders, or they go to trial.

    While Kraft, whose Patriots won the Super Bowl in February, was one of more than two dozen men charged with solicitation last month in Jupiter as part of a multi-city investigation into multiple South Florida spas, and was charged with two counts of soliciting prostitution, acts prosecutors say were caught on video surveillance.

    Kraft has pleaded not guilty.

    Meanwhile, legal experts have raised questions about the tactics Jupiter, Fla., police used in obtaining search warrants for an investigation they said was intended to stop a growing human trafficking problem.

    Here’s why it is odd: prosecutors and law-enforcement officials described the investigation as a probe into human trafficking and portrayed the men who patronized the spas as contributing to the demand for sex slavery.

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    The front door of the Orchids of Asia Day Spa

    In announcing the charges, Dave Aronberg, the state attorney for Palm Beach County, had called human trafficking “evil in our midst,” echoing the rhetoric of law-enforcement officials. And yet, several weeks later, not one person has actually been charged with human trafficking. In fact, prosecutors’ affidavits have not detailed evidence of human trafficking at Orchids of Asia Day Spa.

    “The police are making this case that this is a major human trafficking ring, and that’s why it’s so serious,” said Duncan Levin, a former federal prosecutor and managing partner of Tucker Levin, PLLC who is not connected to the case. “The fact that they had cameras installed in the locations for so long somewhat undermines the claim that there was an extraordinary danger to the people working in the establishment.”

    As the WSJ further notes, the Jupiter Police Department began its investigation in October, according to affidavits and in January installed covert surveillance equipment.

    Men who visited the spas, including Mr. Kraft, were seen engaging in sex acts and identified after their visits on traffic stops, according to court documents. Legal experts have said the traffic stops could be argued as pretextual.

    Prosecutors alleged they saw Mr. Kraft, 77 years old, enter Orchids of Asia Day Spa, located in a small strip mall, on two occasions and saw him pay cash and receive sex acts, which while striking some as bizarre that a billionaire would frequent a low-grade strip mall rub and tug instead of hiring “perfect 10s”, is hardly the pinnacles of crimes being conducted in US society in recent years. Regardless of the ethical framing, Kraft was identified in a traffic stop after his first visit on Jan. 19, when he was the passenger in a vehicle, and visited the spa again the next day, before the Patriots played the Chiefs in the AFC Championship game.

    * * *

    Even if he were to accept the agreement, Kraft could still face punishment from the NFL, which has said in regards to him that the league’s “personal conduct policy applies equally to everyone.” The league said it would “take appropriate action as warranted based on the facts.” The league has previously disciplined players in cases where they were not prosecuted.

    “I think Kraft’s biggest problem is going to be NFL management,” David Weinstein, a Miami lawyer and former prosecutor in the Southern District of Florida, told the WSJ. “Their standards are far lower than proof beyond a reasonable doubt.”

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